Sharekhan's research report on V-Guard Industries
Margin expansion led to healthy earnings growth; topline grew due to restocking effect: Revenue rose 17% YoY during the quarter to Rs 560 crores with partial recovery in revenues lost due to GST disruption during the previous quarter. On a like to like basis after adjusting for GST impact, revenue growth stands at 21% YoY. This growth is despite muted cables & wires segment (6% YoY growth) and the switchgears segment (decline by 28% YoY) in the wake of a slowdown in the real estate sector. Revenue from rest of the product categories like stabilizers, UPS, pumps, water heaters and fans grew in range of 15-20% YoY in Q2FY2018.
Outlook
We continue to assign premium valuation to V-Guard on back of de-leveraged balance sheet, better margin profile, high return ratios and prudent working capital management. Hence we retain Buy rating on the stock with a revised PT of Rs227.
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